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WELCOME Houston Marine Insurance Seminar Tuesday, October 1, 2013 48th Anniversary www.houstonmarineseminar.com Marine Hull Insurance Innovation or Evolution? Norwegian Hull Club Founded in 1837 as a mutual hull club Based in Norway, 3 offices 9000 vessels insured 95% of the OSV fleet in Norway 70% of Mobile Offshore Units worldwide Claims lead – 4800 vessels More than a capacity provider – Expect More! Innovation or Evolution? Source: Flickr Objects insured Policies underwritten Terms offered Agenda I. II. III. IV. V. Marine or Energy? Risk Assessment of the OSV market Insuring the OSV market Client Services Summary I. Marine or Energy? Classification Society definitions Notations : Drill, Well … “Worldwide struggle for consensus over FPSOs” Tradewinds Aug. 2013 Insurance Market As long as you get the most competitive terms? Offshore Support Vessel Market From Offshore Support to Well Intervention Technological Innovations Subsea Construction (Deeper Waters) Well Intervention (Increased recovery from wells) Source: Offshoreenergytoday.com Demand Drives Innovation BP Group Chairman said that Aberdeen and other UK centres had developed “a microcosm of technological innovation.” Experience – Offshore Supply Developement of GT,SI and Deductible Values LOA 88m H&M Value Index 1 LOA 157m H&M Value Index ? 45 Source: DOF I. Summary Marine or energy discussion will continue … There is innovation in the design Set your own guidelines based on operations and qualified parameters set by Class, etc. Ask yourself: What is the rationale for the (high) Sum Insured? II. Risk Assessment of the OSV Market Risk Assessment will be the next step. Question: Is the insurance market able to do a proper risk assessment of innovative design? “It is better to be vaguely right than exactly wrong.” Client Risk Assessment Sliding Left: From UWR Experience To Supporting Tools Client Experience Pricing Tools Internet Sources More UWR Experience CRA – Client Risk Assessment NHC/ DNV Project Define your own parameters Soft Factors Safety Culture Organization A Supportive Tool II. Summary Understand the operation and trade Develop unemotional Risk assessment supportive tools for selection of risk Apply Underwriter Experience Constantly try to look beyond the horizon for changes and innovation within the segment “Risk comes from not knowing what you're doing.” – Warren Buffett III. Insuring the OSV Market Marine Insurance Market Nordic Marine Insurance Plan of 2013 is an all-risks set of conditions Agreed document between the Nordic Association of Marine Insurers (CEFOR) and the Nordic Shipowners’ Association Latest revisions are the only set of conditions offered and used Revisions reflect, amongst other things, the innovation and evolution of the market insured Major evolutionary and experience-driven updates to Chapter 18 – Insurance of Mobile Offshore Units Insuring the OSV Market Develop a pricing tool based on statistics(CEFOR) Driving by looking in the rearview mirror? Incorporate Global trends (2007 – The annul horribilis for the H&M market?) It is about what will happen, not what has happened. Source: CEFOR Technical Loss ratio Markets Today Over capacity Low barriers to entry Trends Banks – Basel III Allocation of capital more selective (less shipping) Insurance Industry – Solvency II Allocation of capital based on risk profile? Lloyds PMD board – Tradewinds aug. 2013 Various ways of doing this have been suggested, said Mr. Indge, with marine hull underwriters collaborating with various registers, classification societies and the International Maritime Organization to improve their understanding of the risks they insure. III. Summary Trust your Risk Assessment Understand the operation and trade in order to offer the best set of conditions to your client Develop and constantly revise pricing tools Stay Disciplined! IV. Expect More Sustainable service platform Terms and Conditions Capacity/Rating Claims Services/Emergency Support Client Services Understand the needs of your clients and members Experience Transfer CLIENT SERVICES SUMMARY Within the OSV market there is Innovation in technology Evolution in the insurance market In order to stay on top as an insurer Keep a strong technical and operational focus Understand your client Develop and revise Risk Assessment tools Develop and revise Pricing Models Stay Disciplined!